MONACO - The European investment fund market is not growing in real terms, says Diana Mackay, managing director of Feri Fund Management Market Information.
“Don’t be fooled by the sales figures,” she told the annual Fund Forum conference in Monaco. “There have been over 8,000 fund launches in Europe since 2000. But the bulk of these funds are still on the shelf.”
She said the industry is surviving on new fund sales. “The market is otherwise at a standstill, net of redemptions. New product sales are the basis of the domestic business in Europe.”
In contrast, European cross-border sales of funds were developing with currently 3,000 funds being offered in five or more countries, of which 1,700 were equity funds.
About 20% of new fund sales in 2004 were through open architecture platforms, according to recent research, said Mackay.
“Open architecture is creating a group of highly skilled asset allocators and fund buyers, looking for value and quality,” she said – but this was not the retail market.
She cited data from Germany that showed equity fund redemptions occurred every time the benchmark DAX index rose by 1%. There was around €170bn of equity funds that could be redeemed if markets improved, she warned.
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